Kratos and Airbus flew the Valkyrie in Europe; Kratos says it can build 10,000 engines a year, with no buyer

The drone left the ground without a runway

On October 12, 2026, Kratos Defense▼−1.84% — Kratos Defense, down 1.84 percent today & Security Solutions (NASDAQ: KTOS) and Airbus announced the first European flight of the U740-Valkyrie↗, an uncrewed combat jet that rose off a rocket-assisted rail needing no runway, manoeuvred at altitude, reached Mach 0.8 and changed its mission in flight ¹². Every planned objective was met ¹². The companies say the flight keeps them on track to deliver a combat-ready collaborative combat aircraft to Germany and other European air forces by 2029 ¹². Airbus's MARS software is the machine's "European brain", with a human kept on the loop ¹².

Airbus Defence and Space chief Mike Schoellhorn sold the pairing as "affordable combat mass": a "program of record" airframe matched to a sovereign European mission system ¹². The aircraft is real hardware, roughly three tonnes at take-off with a range beyond 5,000 kilometres and an internal weapons bay ².

Same morning, a promise of 10,000 engines a year

Kratos's second release↗ celebrated its J85 turbojet, the small engine that powers low-cost cruise missiles, decoys and drones, flying in lugged, palletized and surface-to-surface launches ³. It then put numbers under the mass story: long-lead component orders to build more than 3,000 engines in 2027, and a factory Kratos says can turn out over 10,000 a year by 2029, against what the release calls urgent Department of War demand, the renamed Pentagon ³.

Neither release contains a customer contract, a price or a delivery schedule for the European drone or the engine line ¹³. Trade coverage of the flight↗ noted the announcement "does not refer to a contract from any customer" ⁴. The 3,000-engine order is Kratos buying parts ahead of demand it describes but does not price ³. No customer has yet paid for a production Valkyrie or a production J85 ¹³⁴.

Three rivals are chasing the same German contract

Germany's accelerated uncrewed-combat-aircraft program has rival bidders too: Rheinmetall with Boeing's MQ-28 Ghost Bat, General Atomics' YFQ-42A and Helsing's CA-1 ⁴. Any of them could take the German award the Valkyrie is being pitched for ⁴.

A 52-week low meets a $6.7 million buy

The stock touched a 52-week low of $41.72 on October 7↗, is down 21.2% over three months, in step with a 21.5% slide across aerospace-defense equipment, and has lost about 58% over a year ⁵⁶⁷. Cathie Wood's ARK went the other way, buying 159,918 shares worth about $6.7 million on October 8↗ after roughly 100,523 shares two days earlier, funded partly by selling SpaceX▲+0.05% — SpaceX, up 0.05 percent today and AMD▼−2.97% — AMD, down 2.97 percent today ⁸. Analysts kept buy ratings through the drop, with targets from $68 to $135 ⁷.

Record revenue, bookings that barely moved

The bulls have receipts: second-quarter revenue was $458.8 million, up 30.5%↗, and full-year guidance rose to between $1.75 billion and $1.81 billion ⁹. But bookings of $492.2 million left the quarter's book-to-bill at 1.1, bookings about matching revenue, and the quarter still ran a $1.6 million operating loss while the first half consumed $38.4 million of operating cash ⁹.

What the third-quarter report has to prove

Neither 2029 target can be checked until a contract reaches the filings ¹³. A German award or a production engine order would surface as funded backlog (orders the customer has paid for) above the current $1.57 billion, and a book-to-bill above 1.1 ⁹. Kratos holds $1.44 billion in cash to keep building ahead of both ⁹. Until one of those numbers moves, the flight and the factory remain Kratos's own bet, with ARK holding the same position ⁸.